Obamacare Reality Sinks In

Jeff Judson is a public policy consultant and member of the Board of Directors of The Heartland Institute.

Judson is the former president of the Texas Public Policy Foundation. Under his leadership the TPPF became one of the largest and most influential free market state think tanks in the U.S. and became known for its influence on public opinion, the news media, state legislators and top elected officials, a fact acknowledged by major newspapers in the state. In the year 2002 alone, TPPF earned over $17 million in statewide news media coverage.

Now that the Affordable Care Act (Obamacare) has gone into effect, the debate will shift from promises and theories to what consumers actually experience. As we are seeing, the first reaction appears to be bipartisan sticker shock.

The Manhattan Institute analyzed premiums in many states, including Texas, showing that young men are going to pay almost double for their health insurance under Obamacare, and women will pay 55 percent to 62 percent more.

Those unfortunate enough to live in North Carolina will pay 400 percent more.

A 27-year-old man in Texas will be paying 77 percent more than his current coverage. The study factored in pre-existing conditions.

The Texas Public Policy Foundation conducted a similar study looking at the cheapest plans (for those with no pre-existing conditions) compared to new policies under Obamacare.

Indeed, my own insurance company informed me that my individual ACA premium for my family of five would be increasing by 98 percent compared to my current coverage.

One of the primary goals of Obamacare was to cover the uninsured. Yet, the non-partisan Congressional Budget Office estimates that, for all of this pain, Obamacare will cover fewer than half the uninsured. This then raises the question: Should we try a different way to solve the problem of the uninsured?

When prices increase, demand falls. But rather than making insurance cheaper and easier, it is now more expensive and heavily regulated, which will price more people out of the market.

To counter this natural market response, the IRS will levy fines — excuse me, taxes — on you for failing to purchase insurance you can’t afford. Subsidies will be unavailable for most.

Under Obamacare, even the lowest-priced “Bronze” policies are more than double the cost of what the market was offering young people before, which will make it harder to convince the young to buy insurance.

But this administration is not deterred by the laws of supply, demand, and price elasticity because they have IRS auditors who will be forcing people to buy insurance. Something makes me think these people may not be voting Democrat the next time around.

Now healthy people will subsidize the unhealthy since insurance companies are prohibited from charging unhealthy people more than the healthy. Those who eat well, exercise, and maintain their weight will pay higher premiums so that those with poor eating and exercise habits, and their chronic diseases, will pay less.

One of the more popular provisions of the ACA is the requirement that insurers cover people with pre-existing conditions. But if the IRS fines are less than the cost of insurance premiums, people will forgo insurance until they are sick. In the insurance industry, this is called “jump and dump” — jump into the market when you are sick and then dump your insurance when you are well. This is the ultimate nightmare scenario for an insurance company and further increases prices for all other consumers.

Because of Obamacare and its regulations, some states now only have one or two insurance companies providing health coverage — a competitive market reduced to a monopoly.

The New England Journal of Medicine recently published a study showing how state and federal insurance exchanges will totally control the insurance market, prohibiting non-exchange policies from being sold to individuals and small businesses, and strictly defining quality and controlling prices.

So rather than millions of individual consumers making decisions with firsthand information about their health needs, government bureaucrats with theories about your health will decide what you need and then force you to buy it.